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Wednesday, February 9, 2011

Flood Impact to Values

"Valuations on Brisbane homes are expected to decline in the aftermath of the floods, although the final impact for house prices remains unclear. RP Data senior research analyst Cameron Kusher believes Brisbane house prices could fall by as much as 10 per cent over the next few years, but that's against a backdrop of flat house prices nationwide.

“There will be an impact on property located further away from river and low-lying areas that may back onto a creek. People in those areas will find it much harder to sell those properties,” said the Brisbane-based researcher.

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“In the short term, I think there could be some pain. If you don't need to sell, don't.”

Mr Kusher’s estimate of a 10 per cent drop is optimistic compared to Queensland University of Technology’s Professor Chris Eves, who predicted a drop of up to 35 per cent over the next 12 months.

Professor Eves also believes those in low-lying areas away from the river will suffer most.

...

The impact from the flood, which submerged nearly 15,000 homes, has forced valuers to reconsider assumptions about the risks and impact of once-in-a-century level inundations.

University of Queensland property studies professor Clive Warren said he wouldn't be surprised by a fall as much as 10 per cent on properties after the floods.

“Properties below that 1-in-100 [year] line will be blighted to some degree,” he said.

“They may well come off their prices. And people may well choose to go elsewhere.”

Professor Warren said numerous valuers expected a fall of as much as 10 per cent in these properties.

Brisbane home prices have already been tracking sideways for a year. Most recently, they dropped 0.5 per cent in the three months to December, seasonally adjusted, according to RP Data/Rismark. They were at a median price of $435,000, compared to a 0.4 per cent gain in national home prices in the same period, to a median price of $475,000."